Ten Ways To Secure The Best Home Equity Loan
(NAPSI)-A
home equity loan can help improve your financial situation by paying
down high interest debt, consolidating costly bills or raising needed cash. Before you
decide to pursue this option, carefully consider whether a home equity loan is truly a
constructive long-term solution. Following is a guide from Lisa Sodeika, consumer lending
executive at Household, a leading provider of consumer loan, credit card, auto finance and
credit insurance products, to help you determine if a
home equity loan is
right for you and how to obtain the best financing terms.
1. Consider why you want/need a loan. Is the
loan a necessity? Are there ways to finance other than a loan? Review all the options
available to you. If you are considering a
consolidation loan to
pay off high interest rate debts, make sure you are prepared to curtail nonessential
spending.
2. Prepare a budget. Prepare a budget to evaluate whether you truly need to borrow.
Begin by writing down typical monthly expenses. Are there areas where you can cut back? If
so, it's a good idea to reduce spending while you improve your financial situation.
3. Check your credit history for accuracy.
Your credit report is the main tool lenders use to determine
the level of risk (likelihood that you'll repay your loan) you present and the financial
terms that will be applied to your loan. Ensure your credit history is accurate. You can
receive your credit information by contacting Equifax, Trans Union or Experian. If you
believe your credit history is inaccurate, notify the appropriate reporting agencies in
writing so they can correct the information.
4. Build/improve your credit rating. Improve
your credit rating by paying your bills on time, making sure you don't max out your line
of credit, keeping accurate records of payments and limiting the frequency of cash
advances against your credit cards. Work with your creditors to develop a new payment plan
if you fall behind on bills.
5. Do research. Finance companies, banks,
adult education centers and local colleges offer classes to help you understand basic
financing information. Or log on to Household's consumer Web site www.yourcreditcounts.com or write to Household,
Corporate Communications, 2700 Sanders Road, Prospect Heights, IL 60070-2799, for booklets
on how to stay loan savvy.
6. Shop around. Discuss your financial needs
with at least two lenders in order to understand down payment costs, interest rates,
penalties for paying back the loan early, fees, insurance (life or disability insurance is
not required) and other provisions.
7. Don't sign a loan agreement until you understand
all provisions. Talk through all the important points of the loan with your
lender and read the material before signing. Ask a lot of questions and don't be
intimidated by financial language. Most importantly, don't sign an agreement that is
beyond your financial means or that contains provisions that you do not understand.
8. Seek advice. In addition to lenders,
financial planners and other professionals, talk to your family about what you're doing.
Your financial future affects them as well.
9. Know your rights. A variety of laws
regulate the lending industry, including the Home Ownership and Equity Protection Act and
the Truth In Lending Act. If you feel your lender has treated you unfairly, contact the
Better Business Bureau or a government consumer affairs department.
10. Set goals. Establishing long-term
financial goals will help you determine how to best borrow money. Outside counsel, such as
a financial planner, can help you. Two sources of credit counseling are the National
Foundation for Consumer Credit ( www.nfcc.org ) and the
Association of Independent Consumer Credit Counseling ( www.aiccca.org
).
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